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Forget term deposits! Why I own these 3 ASX dividend shares

Interest rates are sitting at record lows and it’s making life difficult for savers. And with potentially more cuts on the way, I think the dividend yields offered by these ASX shares smash the rates offered by the big banks.

Scentre Group (ASX: SCG)

The Scentre Group share price has traded flat this past year. The group is the owner of Westfield shopping centres in Australia and New Zealand.

The company’s Q3 update released last October reported that customer visits continued to grow as well as achieving a portfolio leased percentage, or occupancy rate, of 99.3%.

Scentre Group’s CEO Peter Allen stated in the update “we are pleased to see continued growth in customer visitation demonstrating our focus on delivering what customers want”.

In the most recent half-year outlook, Scentre Group stated that it “reconfirms the distribution forecast for 2019 of 22.60 cents per security, an increase of 2%”.

Scentre Group is currently paying a dividend yield of 5.62%. With a high occupancy rate, growing distributions and increasing foot traffic I believe the market is understating the value of Scentre Group shares.

Harvey Norman Holdings Limited (ASX: HVN)

The Harvey Norman share price has soared 40% this past year and boasts a very attractive dividend yield of 7.47%.

In the company’s AGM presentation released in November, Harvey Norman reported a 4.5% increase in earnings-per-share to 34.70 cents and net debt to equity ratio of 19.4%, an improvement compared to 25.5% the year prior. In addition, there was an 8.4% increase in reported profit before tax (PBT) of $574.56 million.

Despite softer economic conditions in Australia, Harvey Norman reported that 23% of PBT now comes from overseas company-operated stores. Malaysia will be the major growth driver of the company for many years to come.

In my view, Harvey Norman looks not only a good dividend stock but also a growth stock for investors.

National Bank Australia Ltd. (ASX: NAB)

Despite all the turmoil, the National Australia Bank share price has traded relatively flat with the price up 2.6% this past year. NAB offers a dividend yield of 6.6% despite making a dividend cut last year.

The appointment of Ross McEwan as CEO is one of the reasons I own NAB shares. According to a news release by the company, McEwan led the Royal Bank of Scotland through significant change and recovery.

After the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, NAB will need experienced hands to guide the company. In addition, with the AUSTRAC investigation underway, a potential fine may result

I like how NAB is the largest and leading business bank in Australia and has connections with growth companies Xero Limited (ASX: XRO) and REA Group Limited (ASX: REA). These are smart collaborations and help attract potential new business to NAB.

National Australia Bank is also one of the banks supporting the Government’s First Home Loan Deposit Scheme to assist first home buyers into the property market. I see this is another win for the bank to attract even more business.

Foolish Takeaway

I believe dividend shares belong in every investor’s portfolio and they become even more valuable in low interest rate environments.

Large companies are more likely to survive economic downturns while paying out dividends which can be used to reinvest and let compounding returns work magic over the long term.

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Motley Fool contributor Matthew Donald owns shares of Harvey Norman Holdings Ltd., National Australia Bank Limited, and Scentre Group. The Motley Fool Australia owns shares of National Australia Bank Limited and Xero. The Motley Fool Australia has recommended REA Group Limited and Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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